Carrizo Oil & Gas amends credit facility, permitting sale of notes

By Sara Rosenberg

New York, Oct. 25 - Carrizo Oil & Gas Inc. amended its credit facility, allowing for the issuance of up to $425 million of senior notes prior to Dec. 15, according to an 8-K filed with the Securities and Exchange Commission on Monday.

The notes can only be issued if all loan borrowings are repaid in connection with the offering and a tender offer is completed on or before Dec. 15 for the company's outstanding 4.375% convertible senior notes due 2028.

Also, following completion of the notes offering, the maximum ratio of total net debt to consolidated EBITDAX will be revised to 4.75 to 1.00 for the fiscal quarter ending on Sept. 30, 2010, 4.25 to 1.00 for the fiscal quarters ending on or after Dec. 31, 2010 and on or before June 30, 2011, 4.50 to 1.00 for the fiscal quarters ending on or after Sept. 30, 2011 and on or before Dec. 31, 2011, and 4.00 to 1.00 for each fiscal quarter ending on or after March 31, 2012.

And, the maximum ratio of senior debt to consolidated EBITDAX will be changed to 2.25 to 1.00 for the fiscal quarters ending on or after Sept. 30, 2010 and on or before June 30, 2011, 2.50 to 1.00 for the fiscal quarters ending on or after Sept. 30, 2011 and on or before Dec. 31, 2011 and 2.25 to 1.00 for each fiscal quarter ending on or after March 31, 2012.

Furthermore, the amendment provides that, on the date that the company purchases any convertible notes through the tender offer, the borrowing base under the credit facility will be reduced by an amount equal to 25% of the difference between the total principal amount of the senior notes issued and the total principal amount of convertibles purchased.

The amendment was completed on Oct. 21.

Wells Fargo is the administrative agent on the deal.

As per the amendment, on Monday morning, the company announced a $325 million senior unsecured notes offering that will be used to repay all borrowings outstanding under its senior credit facility.

Remaining proceeds, together with the resulting additional capacity under its senior credit facility, will be used to fund a concurrent tender offer for up to $300 million of its outstanding 4.375% convertible senior notes due 2028.

Any note proceeds not used to repay bank debt will be used to fund in part the company's recently expanded capital expenditure program, including exploration in the Eagle Ford Shale and Niobrara formation, and for general corporate purposes.

Carrizo Oil & Gas is a Houston-based energy company.

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